11 Would Dean Brockbank and Toby Freeman for
12 PacifiCorp please get behind the hotly wired seats.
13 (Off the record for seating of new panel.)
14 SUPERVISOR OVERMAN: First question, Supervisor
15 Armstrong, please. Oh, please do your opening remarks,
16 and then the first question from Supervisor Armstrong.
17 MR. BROCKBANK: I'm the quiet one of the two.
18 Mr. Chair, supervisors, I'm Dean Brockbank.
19 I'm the vice president and general counsel of PacifiCorp
20 Energy. I appretiate the opportunity of being here this I
21 evening with you and the citizens of the1county, and
22 hopefully to enlighten and answer your questions with
23 the issues that are all around us tonight.
24 I want to just pledge PacifiCorp's continued
25 intere sts in the county and our pledge to continue
1 providing reliable energy at the lowest possible cost and
2 risks to the citizens of the county. I was just asking
3 Toby before we were coming up here how long the company or
4 its predecessors have been serving Siskiyou County. It's
5 nearly a century. We hope to be able to continue doing
6 that for a long period to come.
7 I want to emphasize the importance of
8 collaboration with PacifiCorp and the other folks that
9 you'll be hearing from tonight. We appreciate hearing
10 their opinions. We'll have some different opinions. And
11 we want to be able to enlighten you with respect to those
12 issues that are important.
13 The benefit of having Toby here with me,
14 Mr. Freeman, who is more familiar to most of you, is to
15 the extent there's difficult questions, I can have him
16 answer those. And the best benefit is get to decide
17 which ones are easy and which ones are difficult.
18 From PacifiCorp's perspective, here's where we
19 are on some of the questions. As I mentioned, we're a
20 staunch advocate for our customers. We believe that our
21 customers' interests are paramount in this and our seat at
22 the table is watch out for what is the most prudent for
23 the customers. We want to emphasize the role the Klamath
24 project has played in serving the electric needs of the
25 region. It's a carbon free resource, it's a renewable
1 resource, and it plays a critical role in the basin. I
2 also want to emphasize, 1 believe the supervisors are
3 aware, PacifiCorp is not a party to the proposed basin
4 agreement, and I wanted to make sure that you and the
5 citizens are aware of that, we're not a party to the
6 agreement.
7 There are many areas where we are moving forward
8 with the dam relicensing questions, both at the Federal
9 Energy Regulatory Commission and at the state level with
10 California and Oregon on water quality certifications. I -
11 will say we're in the very early stages of those water
12 quality certifications, and that's part and parcel of the
13 relicensing.
14 As you all know as well as we do, because we
15 certainly are aware, these questions relating to dam
16 relicensing, dam removal, they're very politically charged
17 and they're matters of public policy to some degree. And
18 although PacifiCorp is pursuing relicensing, we remain I
19 neutral on these questions of politics and of public
20 policy. The states that govern us and the Federal govern
21 us decides. We certainly put our input. We want to take
22 the customer input, want to take all of our customers'
23 input and make the best decisions that are prudent. But
24 we do remain neutral on these political issues.
25 As has been alluded to this evening, PacifiCorp
1 is in discussions with members of the Klamath settlement
2 group who negotiated the proposed agreement. PacifiCorp
3 and the other parties have agreed to keep those questions
4 and discussions confidential. I want to ensure the
5 supervisors and ensure the citizens of the County that our 6 number one objective is to watch out for our customers.
7 And whatever decision PacifiCorp ultimately signs up for,
8 it will be with the customer in mind and what is the most
9 prudent on behalf of our customers.
10 That's my opening statement. Thanks.
11 SUPERVISOR OVERMAN: Thank you. Toby?
12 MR. FREEMAN: I'll just do a quick introduction
13 for anybody here who doesn't know me. I'm Toby Freeman,
14 I'm Pacific Power's regional community manager for
15 Siskiyou County. I've been doing this job about a year
16 and a half now, but for six years prior to that I was
17 managing PacifiCorp's hydro licensing program and
18 leading the team that was involved in relicensing the
19 Klamath River hydroelectric project. Those are just the
20 last six years or so of my 18-year career managing hydro
21 licensing throughout the pacific northwest.
>22 SUPERVISOR OVERMAN: Thank you. And now at
23 last, Marcia Armstrong, please.
24 SUPERVISOR ARMSTRONG: I'll ask you a series of
25 questions, gentlemen, about how this might impact rates,
1 either the retrofitting of the dams or fishways, or for
>2 the settlement agreement will have impacts on rates.
3 What is your service area?
4 MR. BROCKBANK: Our service area --entire
5 service area? It's a good part of the state of Utah,
6 it's southeast Idaho, a good part of the state of
7 Wyoming, it is here, Siskiyou County, Del Norte County,
8 Northern California, Southern Oregon, and parts of the
9 state of Washington. Did I miss anything?
10 SUPERVISOR ARMSTRONG: Doesn't include Humboldt
11 County?
12 MR. BROCKBANK: I don't believe so. No.
13 SUPERVISOR ARMSTRONG: And would those
14 particular costs, are they going to be shared among all
15 the rate payers that you just mentioned?
16 MR. BROCKBANK: The costs --are you talking
17 about cost --let me clarify one thing, Supervisor. The
18 costs of the basin agreement --talking about costs of
19 the basin agreement?
20 SUPERVISOR ARMSTRONG: Costs of either
21 installing fish bypasses, fishways, or the settlement
22 agreement.
23 MR. BROCKBANK: Cost of relicensing.
24 SUPERVISOR ARMSTRONG: Removing the dams or
25 either --putting in fishways?
1 MR. BROCKBANK: Whatever decision PacifiCorp
2 ultimately makes, as I said before, we will fight to
>3 make sure it is the most prudent and economical decision
4 for our customers. That's how public utilities work is
5 their customers pay for those costs. Yes, the customers
6 will pay for the costs whether it's for relicensing,
7 whether it's for screens and ladders or removal or
8 whatever that is. Our customers are --
9 SUPERVISOR ARMSTRONG: That will be shared
10 among all the rate payers? Because I know we went
11 through an issue recently in the last couple years it
12 was not shared among all rate payers, it was only shared
13 among California rate payers. Will this be shared among
14 all rate payers?
15 MR. BROCKBANK: Most likely not all of the
16 customers in all of the states. I don't want to get
17 into too many details, but years ago when Pacific Power
18 merged with Utah Power, there was something called the
19 hydro endowment. And the northwestern states that were
20 getting benefits of the inexpensive hydropower continued
21 to get those benefits and they continued to pay for the
22 costs. The costs of relicensing would be primarily
23 borne by those customers who are benefiting from the
24 less expensive hydropower.
25 SUPERVISOR ARMSTRONG: So that would be
1 Southern Oregon and California rate payers. Is that
2 correct?
MR. BROCKBANK: Largely, if it were full
4 relicensing, it would likely include customers in
5 Wyoming and Washington, as well.
6 SUPERVISOR ARMSTRONG: In Wyoming and
7 Washington, as well. Okay.
8 And can rate payers be exempted from bearing the
9 costs such as the Klamath project users?
10 MR. BROCKBANK: Not by any mechanism I'm familiar 11 with.
12 SUPERVISOR ARMSTRONG: Thank you.
13 SUPERVISOR OVERMAN: Supervisor Cook?
14 SUPERVISOR COOK: That's interesting about the- 15 rate payers and their costs. I could have sworn I heard
16 Mr. Hurner say there would be no rate payer costs on the
17 activities. But he can discuss that later on. I'd like
18 to remind him that that seems to be a bit of a
19 discrepancy between you and he.
20 I'm curious about the liability of removal of
21 the dams. I would think that since I haven't seen any
22 studies on sediment, and we will have that discussion
23 later on this evening, but I would think that you would
24 face some liabilities even on our roads if you remove
25 the dams at your expense. Do you have any concerns
1 about liability? Is that going to be an issue? Who do ~
2 we sue is what --
3 MR. BROCKBANK: We appreciate that vote of
4 confidence, Supervisor Cook.
5 SUPERVISOR COOK: Just suppose we wipe out a
6 year class of salmon and we raise the bed an inch and a
7 half, who do we sue? How are you viewing liability?
8 MR. BROCKBANK: Very important question. We,
9 PacifiCorp, is concerned about liabilities no matter
10 what way you look at it. Whenever a public utility, a.
11 power company such as Pacific Power, has liabilities,
12 it's generally its customers that pay for those. As far
( 13 as who pays for those, it's generally --generally it is
14 the customer that pays for those. Having said that, I
15 can assure you that PacifiCorp will do everything in its
16 power to minimize the impact on the customers.
17 SUPERVISOR COOK: So we should sue Toby.
18 MR. BROCKBANK: Toby is always free game.
19 SUPERVISOR COOK: I have one other question.
20 You mentioned this was a carbon free source of
21 electricity.
22 MR. BROCKBANK: Yes.
23 SUPERVISOR COOK: I've also been told the
24 couple solar projects I was working with was very
25 excited to be close to a hydro area because they need to
1 work hand in hand with that. If you remove this, I
2 would assume, and I have difficulty figuring out from
3 the settlement agreement where that power will come
4 from. Because I'm told over and over again that
5 California is right at that max, they're using all the
6 power they can get. So I'm concerned about a carbon --
7 non-carbon resource you would have to replace this with.
8 MR. BROCKBANK: To your first point about
9 benefiting a project such as solar project, you're spot
10 on. Hydro projects serve as what we call load following 11 projects. For example, with a wind project that
12 generates power only when the wind blows, I know that
13 will not come as a shocker to anybody. You have to have
14 backup generation for when the wind is not blowing. And
15 hydro storage projects provide exactly that. You can
16 turn that switch that quick and you can get generation
17 when the wind stops blowing.
18 To your second question, if the dams were
19 ultimately removed, how would that power be replaced?
20 That's a good question. And I can assure you if that
21 were the ultimate eventuality, PacifiCorp would find a
22 way to serve its customers. But it's a challenge. In
23 this day and age, it's extremely difficult to cite new
24 generation recourses. I don't think that comes as a
25 surprise to anybody.
1 SUPERVISOR OVERMAN: One of the phenomenons in
>2 California over the last several years is we don't have
3 enough electricity. We have brownouts, we have
4 blackouts, we have rolling blackouts and so forth. One
5 of my concerns is that we take out some clean power
6 generating dams and how much carbon are we going to put
7 in the air to give us adequate supply of electricity,
8 and are we going to have an adequate supply of
9 electricity, or are we going to be suffering brownouts
10 if the dams are removed?
11 MR. BROCKBANK: Mr. Chair, PacifiCorp makes it
12 its top priority to ensure the reliability of the
13 electricity supply to all of its customers, including
14 the customers of Siskiyou County. I don't believe --
15 and I'm looking at Toby for confirmation --when
16 California was experiencing brownouts, I don't believe
17 they extended up here, or did they extend up here? I
18 didn't think so.
19 I can assure you no matter what happens, our
20 paramount priority will be to make sure that the lights
21 always stay on. We like to be a company and a service
22 taken for granted. We want you to wake up in the morning 23 and just not think --not hope the lights will turn on,
24 not hope the coffee pot will start smelling good
25 throughout the kitchen. We want to be taken for granted.
1 If we are taken for granted, we're doing our job.
2 SUPERVISOR OVERMAN: Thank you. Supervisor
3 Erickson.
4 SUPERVISOR ERICKSON: I want to start with a
5 comment. I hope --I don't hope --in your opening
6 discussion you talked about you are now in discussion
7 with the Klamath project.
8 MR. BROCKBANK: Yes.
9 SUPERVISOR ERICKSON: But it's confidential?
10 MR. BROCKBANK: Yes.
11 SUPERVISOR ERICKSON: And the project is out
12 for okay and you're still in discussion?
13 MR. BROCKBANK: I'm sorry, I missed the last
14 comment you said.
15 SUPERVISOR ERICKSON: You said that you are in
16 discussion, you're in discussion with the Klamath
17 project. No?
18 MR. FREEMAN: The Klamath Settlement Group.
19 SUPERVI SOR ERI~CKSON: I sn' t that be fore us here
20 to look at? I would think that---w~uld be the discussions
21 would come before.
22 MR. BROCKBANK: I see. We are in discussions
23 with representatives of what we call the Klamath
24 Settlement Group, for lack of a better term. The groups
25 who came together, including Siskiyou County,
1 Mr. DeMarco who has been at some of the meetings, and
2 the gentlemen you saw before, and a variety of the other
3 interests who have negotiated the proposed basin
4 settlement agreement, again of which PacifiCorp is not a
5 party. But we are in discussions with them in
6 connection with issues relating to the basin, to the
7 darns, what's best for the basin, darn removal, all kinds
8 of questions. But I do want to emphasize that
9 PacifiCorp takes its obligations very seriously when we
10 sign an agreement that we're going to keep things
11 confidential, we're going to keep it confidential. I
12 want to make take the opportunity to emphasize we're
13 looking out for the customers' interests in these
14 discussions.
15 SUPERVISOR ERICKSON: Thank you.
16 Would you explain for me net metering. I don't
17 know what that is.
18 MR. BROCKBANK: Boy, I kind of know what it is. 19 I'll turn to the expert.
20 MR. FREEMAN: Thanks, guys. How nice to talk.
21 You know it's tough for me to sit here and bite my
22 tongue.
23 Basically net metering is mechanism available to
24 our customers so that folks, for example, who want to
25 install a solar panel on their house to of f set some of
1 their use can work with a net meter. What that means is
2 during times when their solar tnstallation --as an
3 example, could be a windmill, as well --at times when
4 that's generating more electricity than they're actually
5 using at their home, that energy goes back into our system
6 and you receive credit for that. So next month, for
7 example, when you might need more generation from us to
8 offset what your windmill isn't providing for you, you can
9 receive a credit on that cost.
10 SUPERVISOR ERICKSON: Okay. So are there any net
11 metering arrangements with the Klamath project users.
12 MR. FREEMAN: The only one I'm familiar with
13 isn't actually in effect yet. Theres a farmer in Malin,
14 which is in Oregon. It's within the Klamath irrigation
15 project. Harold Hartman is developing solar demonstration
16 project that will involve net metering. So at times of
17 the year when Harold's solar project isn't powering a pump
18 that he's using to irrigate a 40-acre pasture, the energy
19 that that solar ray is generating will in fact go back
20 into the grid and be credited against his costs which he
21 is using.
22 SUPERVISOR ERICKSON: And that's available to all 23 rate payers in Siskiyou County.
24 MR. FREEMAN: That's available to all our
25 customers, in fact.
1 SUPERVISOR ERICKSON: Okay. Again back to the
2 cost, is there a lower cost to farmers and ranchers?
3 Didn't we just go through this where we took it off the
4 table and --
5 MR. FREEMAN: There is. So I think folks may be
6 familiar with something typically called the 1956
7 contract. That actually was simply a renewal of a
8 contract that was originally entered into between the
9 Bureau of Reclamation and the California-Oregon Power
10 Company back in .1917. There were a number of features to
11 that contract, but one element of that contract was a
12 special rate for on project irrigators within the Klamath
13 irrigation project. That included irrigators both in
14 Oregon and California. That contract expired in 2006.
15 There was settlement agreement and ruling at the
16 California PUC to address rate shot concerns associated
17 with a 10 to 20-fold increase in power costs overnight.
18 So instead, those increasing costs are gradually being
19 phased in over a four-year period in California. Oregon
20 had a slightly different structure, so it's a seven-year
21 phase in there which, in fact, was mandated by the
22 legislature in Oregon.
23 SUPERVISOR ERICKSON: And it did not- affect other
24 rate payers?
25 MR. FREEMAN: Actually. it did affect other rate
1 payers. Frankly, it was the folks in this room in large
2 part who paid a little more for their electricity so that 3 on project irrigators in California could have that
4 four-year ramp in the tariff.
5 SUPERVISOR ERICKSON: So in your speaking about
>6 making sure all your customers are treated equally, we
7 will hope you will continue to do that, even as you come
8 to the table.
9 MR. BROCKBANK: We certainly will. And I want
10 to emphasize what Toby just said. We only charge what
11 regulators allow us or require us to charge.
12 SUPERVISOR ERICKSON: That's not the answer I
13 was looking for. You know, I like to see us all be
14 treated equal. And when the time is up, the time is up.
15 And we don't infringe upon the other customers again as
16 you phase in a four-year plan for the farmers and the
17 ranchers.
18 MR. BROCKBANK: I don't disagree with that. I
19 want to make sure that everyone in the room understands
20 that as a power company as a regulated utility, we don't
21 get to just decide we're going to raise your electric
22 rates or we're going to treat everybody the exact same.
23 We are --it is Governor-appointed commissioners who
24 decide that.
25 SUPERVISOR OVERMAN: Thank you.
1 SUPERVISOR ERICKSON: But the plan is brought
2 to them by you.. So I wou1d hope that you would, like I
3 say, take into consideration this county doesn't need
4 anymore rate increases.
5 MR. BROCKBANK: Understood.
6 SUPERVISOR OVERMAN: Thank you. Supervisor
7 Kobseff.
8 SUPERVISOR KOBSEFF: Did PacifiCorp conduct any
9 studies or is your company aware of any studies that
10 suggests that there could be a negative environmental
11 consequence associated with dam removal?
12 MR. BROCKBANK: I'll let the scientist take
13 that one.
14 MR. FREEMAN: Yeah. I have a bachelor degree
15 in liberal arts, so I'll take the science question.
>16 We have not conducted dam removal studies.
17 However, we did millions of dollars of research associated 18 with the development of our license application. We've
19 also done additional studies to support our applications
20 for clean water act certification with California and
21 Oregon. So we did not, in fact, do a lot of work that was 22 really looking at either benefits or impacts associated
23 with dam removal. But certainly through those relicensing 24 studies, we identified issues that frankly should be
25 evaluated by anybody considering the removal of dams on
1 the Klamath River.
2 SUPERVISOR KOBSEFF: You think it would be wise
3 to have those studies in place, committed to before dam
4 removal?
5 MR. FREEMAN: Definitely. I can't imagine
6 anybody proposing to remove dams wouldn't be required to
7 do additional environmental study as part of the
8 permitting process.
9 SUPERVISOR KOBSEFF: One quick question on the
10 fish passage. What's the --from your standpoint, your
11 company's standpoint, what's the best option that can be
12 put on the table for fish and for passage that will
13 work?
14 MR. FREEMAN: You know, I don't think anybody
15 could dispute that if what you're trying to do is move a
16 fall chinook from below Iron Gate Dam to somewhere
17 upstream of Iron Gate Dam, having no dam in the way is
18 probably the easiest way for the fish to swim there.
19 That said, in our 2004 license application, we didn't
20 propose fish passage because based upon our studies,
21 there was no indication that there was any approach to
22 fish passage, including the removal of the dams, that
23 was going to provide more salmon and steelhead in the
24 Klamath system than our Iron Gate Hatchery is providing
25 today. Thus, our conclusion was mitigation that we
1 could provide that's adequate.
2 (Applause. )
3 SUPERVISOR OVERMAN: We have time for one more
4 question. Who would like to? Supervisor Armstrong says
5 she has no more questions for the night.
6 SUPERVISOR ARMSTRONG: I have additional rate
7 payer questions. And one is, if this settlement
8 agreement went through and there was a rate break to
9 back to the old --the whatever it is for the Klamath
10 project users --who would pay for that?
11 MR. BROCKBANK: You know, I couldn't tell you.
12 Not --PacifiCorp is not party to that agreement and not
13 familiar with the ins and outs of that. You'll have to
14 ask folks familiar with the agreement.
15 SUPERVISOR ARMSTRONG: The fishways I've read
16 are estimated at $300 million to put fishways in the
17 $300 million and for $80 to $90 with dam removal, but that
18 doesn't include some of the sediment treatment. I
>19 understand you have a different figure for that. Those
20 costs would be borne by the rate payers. How much
21 conceivably could rates go up to pay for that if you say
22 that those in the --the limited number of us that are
23 in that service area are going to bear that, what could
24 that mean to our rates? That's a lot of money.
25 MR. BROCKBANK: I want to emphasize, it is a
1 lot of money. No matter what way you look at lt,
2 whether the dams are removed or whether the requirements
3 that FERC has laid out are implemented in its
4 Environmental Impact Statement and that we would expect
5 to see in a new license. Of course we don't have a new
6 license yet. It's going to be a lot of money either
7 way.
8 The FERC pretty much gave an estimate for dam
9 removal, extremely broad estimate, depending on what
10 happens with sediment, anywhere from $80 million to
11 $4 billion dollars. And that was a very broad --not a ['~:
12 very helpful number. That's what Federal Energy
13 Regulatory Commission provided. ~
14 It's almost impossible to tell how much rates
15 will go up until you have a better figure.
16 SUPERVISOR ARMSTRONG: I know that when we had
17 the --when we were calculating the costs, we got
18 something in the mail that said the equivalent of so much
19 million was in how many percentage increase on our rates.
20 Do you have any kind of equivalency like that, what a
21 million dollars might mean to our rates?
22 MR. BROCKBANK: This is when I really ought to
23 look at Toby. It's a difficult question, because it
24 depends on what the number is and which customers and
25 which states pay for it. And I probably need to have an
1 Excel spreadsheet to figure that out. It's a complex
2 question that requires calculations that I can't do in
3 my head. It could be cents per kilowatt hour, could be
4 2 percent, 5 percent, 10 percent, increase on a monthly
5 bill. It's difficult to know. I can give you those --
6 SUPERVISOR ARMSTRONG: Per million? Because I
7 notice in June 2006, billing to California rate payers,
8 the rate increase was $12.8 million. And that was an
9 overall rate increase equivalent of 18.9 percent. That
10 meant $1 million was the equivalent of 1.48 percent
11 increase in overall rates. You're talking $300 million
12 to $4 billion here. So that would seem to be an
13 extraordinary amount that conceivably could be added to
14 our rates .
15 MR. BROCKBANK: I don't disagree with that,
16 Supervisor.
17 SUPERVISOR ARMSTRONG: So it could be way more
18 than 10 percent?
19 MR. FREEMAN: So, Marcia, I think there's a
20 couple answers to your question. One is that the ratio
21 between millions of dollars and how that translates into
22 percentage impact for California customers probably
23 hasn't changed all that much since that mailer went out.
24 I think what Dean is trying to convey to folks, however,
25 is that the licensing implementation costs, for example,
1 if we're building a fish ladder someplace, the costs
2 associated with that are amortized over a long period of
3 time, over the term of that next operating license. So
4 30 to 50 years. And so subsequently the actual dollar
5 impact of that investment in a given year may not be as
6 great as, for example, a dam removal situation where
7 you're not really amortizing those costs. You may be
8 looking at those costs being passed along to customers
9 in the more concentrated manner. And then you get into
10 that whole issue of how are these costs actually
11 allocated or parsed out to our various customers in our
12 six state service territory. So that really influences
13 the actual impact that Siskiyou County customers would
14 experience, as well. That's why absent a fairly
15 specific scenario and analysis associated with that,
16 it's a tough question to give an easy answer to.
17 SUPERVISOR OVERMAN: Okay. Marcia, I'm sorry,
18 we'll have to move along.
19 Thank you very much.